Tax Advice For New Australians
Aug 22nd 2002, 4:58 am
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Tax Advice For New Australians
August 22, 2002A B O U T U S T H E W E S T O N L I N E T H E W E S T S H O P T A B F O R M R E G I O N A L S T H E G A M E
Saturday
Showers developing.
21°C
Sunday
Occasional showers.
17°C
Drug tax loss: Dealer wins $220,000 deduction
By Sean Cowan
A NOTORIOUS heroin dealer will be able to claim a $220,000 tax deduction for money stolen during a drug deal after a Federal Court ruling yesterday.
Justice Robert Nicholson ruled that Francesco Domenico La Rosa earned his taxable income by dealing in drugs.
La Rosa, who is in his 50s, was entitled to claim the deduction because the money was stolen during a deal connected directly with his illicit business, Justice Nicholson said.
La Rosa, of Alexander Heights, was jailed for 12 years in 1996 for being knowingly concerned in the importation of heroin and possessing heroin, cocaine and amphetamines.
He has been a constant in Perth's court system since that time, claiming National Crime Authority officers paid him $20,000 to set up a drug laboratory at Gingin in 1994.
But while La Rosa was in jail, the Australian Taxation Office moved in.
It found he had not filed a tax return for seven years and calculated tax assessments for him based on evidence provided during La Rosa's court appearances and on its estimations and investigations.
Its assessment for the 1994-95 financial year showed La Rosa earned a taxable income of $446,954. La Rosa appealed against the assessment to the Administrative Appeals Tribunal last year.
The tribunal allowed the $224,793 deduction and yesterday's ruling upheld that decision. But La Rosa will have to pay tax on $222,161.
During the Federal Court appeal, lawyers for the taxation commissioner submitted there was no evidence the money was stolen from La Rosa during a drug deal. The crown also submitted that the tribunal should not have found the stolen money was an expense incurred while La Rosa was earning his income.
The deduction should not be allowed because it was contrary to public policy.
The lawyers said tax deductions were supposed to provide an incentive to act lawfully and not commit crimes.
However, Justice Nicholson said none of the grounds of the appeal could be upheld.
"The findings of the tribunal are that the occasion of the loss occurred during an intended drug purchase and was directly connected with the carrying on of the taxpayer's illicit drug-dealing business," he said.
"The inference from those findings is that occasion for the loss was the operation of that (illegal) business in a way normal to it.
"Such encouragement to criminal activity as a deduction is not a frustration to criminal enforcement: it is arguably an anomaly to which Parliament should give attention."
The tribunal was told the money had been buried at La Rosa's daughter's property.
La Rosa, who is still in jail, his daughter and his son-in-law told the tribunal that La Rosa had intended to buy drugs with the money but was set up and robbed.
La Rosa also claimed there was no evidence that about $220,000, included in a 1995-96 assessment - some of which was held in a BankWest safety deposit box - was his. The tribunal was told that some money was withdrawn later by a friend, Carlo Fragomeni. That money was deemed taxable and the ruling upheld by the Federal Court.
Lawyers for La Rosa said money earned from his drug dealing should not have been included in his tax assessment.
In a separate decision, the tribunal ordered La Rosa last year to pay tax on money seized under WA's proceeds of crime laws.
© 2002 West Australian Newspapers Limited
All Rights Reserved.
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Saturday
Showers developing.
21°C
Sunday
Occasional showers.
17°C
Drug tax loss: Dealer wins $220,000 deduction
By Sean Cowan
A NOTORIOUS heroin dealer will be able to claim a $220,000 tax deduction for money stolen during a drug deal after a Federal Court ruling yesterday.
Justice Robert Nicholson ruled that Francesco Domenico La Rosa earned his taxable income by dealing in drugs.
La Rosa, who is in his 50s, was entitled to claim the deduction because the money was stolen during a deal connected directly with his illicit business, Justice Nicholson said.
La Rosa, of Alexander Heights, was jailed for 12 years in 1996 for being knowingly concerned in the importation of heroin and possessing heroin, cocaine and amphetamines.
He has been a constant in Perth's court system since that time, claiming National Crime Authority officers paid him $20,000 to set up a drug laboratory at Gingin in 1994.
But while La Rosa was in jail, the Australian Taxation Office moved in.
It found he had not filed a tax return for seven years and calculated tax assessments for him based on evidence provided during La Rosa's court appearances and on its estimations and investigations.
Its assessment for the 1994-95 financial year showed La Rosa earned a taxable income of $446,954. La Rosa appealed against the assessment to the Administrative Appeals Tribunal last year.
The tribunal allowed the $224,793 deduction and yesterday's ruling upheld that decision. But La Rosa will have to pay tax on $222,161.
During the Federal Court appeal, lawyers for the taxation commissioner submitted there was no evidence the money was stolen from La Rosa during a drug deal. The crown also submitted that the tribunal should not have found the stolen money was an expense incurred while La Rosa was earning his income.
The deduction should not be allowed because it was contrary to public policy.
The lawyers said tax deductions were supposed to provide an incentive to act lawfully and not commit crimes.
However, Justice Nicholson said none of the grounds of the appeal could be upheld.
"The findings of the tribunal are that the occasion of the loss occurred during an intended drug purchase and was directly connected with the carrying on of the taxpayer's illicit drug-dealing business," he said.
"The inference from those findings is that occasion for the loss was the operation of that (illegal) business in a way normal to it.
"Such encouragement to criminal activity as a deduction is not a frustration to criminal enforcement: it is arguably an anomaly to which Parliament should give attention."
The tribunal was told the money had been buried at La Rosa's daughter's property.
La Rosa, who is still in jail, his daughter and his son-in-law told the tribunal that La Rosa had intended to buy drugs with the money but was set up and robbed.
La Rosa also claimed there was no evidence that about $220,000, included in a 1995-96 assessment - some of which was held in a BankWest safety deposit box - was his. The tribunal was told that some money was withdrawn later by a friend, Carlo Fragomeni. That money was deemed taxable and the ruling upheld by the Federal Court.
Lawyers for La Rosa said money earned from his drug dealing should not have been included in his tax assessment.
In a separate decision, the tribunal ordered La Rosa last year to pay tax on money seized under WA's proceeds of crime laws.
© 2002 West Australian Newspapers Limited
All Rights Reserved.
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